1099-LTC: Long-Term Care and Accelerated Death Benefits
Reports payments made under a long-term care insurance contract and accelerated death benefits from a life insurance policy.
Overview
Form 1099-LTC is an IRS information return used to report payments made under a qualified long-term care insurance contract and accelerated death benefits paid under a life insurance policy. Insurance companies, viatical settlement providers, and other payers are required to furnish this form to both the IRS and the recipient so that the recipient can determine how much, if any, of the benefits received are excludable from gross income.
The tax treatment of these benefits is governed primarily by IRC Sections 7702B and 101(g). Under those provisions, amounts received from a qualified long-term care insurance contract are generally excludable from income up to a per-diem limit set annually by the IRS, provided the insured is a chronically ill individual. Accelerated death benefits paid because the insured is terminally ill are fully excludable; accelerated benefits paid because the insured is chronically ill are subject to the same per-diem cap that applies to long-term care contracts. The recipient uses the information on Form 1099-LTC together with Form 8853 (Archer MSAs and Long-Term Care Insurance Contracts) to calculate any taxable portion and report it on Form 1040.
Payers must file a separate Form 1099-LTC for each insured individual, even if multiple policies cover the same person. The form captures not only the dollar amounts paid but also the basis of payment — specifically whether benefits were paid on a per diem (indemnity) basis or as a reimbursement of actual expenses — because that distinction affects how the exclusion is calculated. Given the aging population and the growing prevalence of long-term care policies, Form 1099-LTC is increasingly common in individual tax engagements, and mishandling it is one of the more frequent errors on complex 1040 returns.
Who Files This Form?
Any insurance company or other entity that pays benefits under a long-term care insurance contract must file Form 1099-LTC. This includes commercial insurers, fraternal benefit societies, and any other organization that issues qualified long-term care insurance contracts as defined under IRC Section 7702B. Additionally, any payer of accelerated death benefits under a life insurance policy — whether the issuing life insurer or a viatical settlement provider — must file the form when those benefits are paid to a policyholder who is either terminally ill or chronically ill.
There is no minimum dollar threshold that triggers the filing requirement. Even a single dollar of qualifying long-term care or accelerated death benefit payment obligates the payer to issue a Form 1099-LTC for the tax year in which the payment was made.
A separate Form 1099-LTC must be filed for each insured individual. If a single policyholder has coverage under multiple contracts with the same payer, the payer may issue one consolidated form or separate forms, but each insured must be identifiable. When a policy covers both spouses, for example, a separate form is required for each spouse.
Payers are also responsible for furnishing a copy of the form to the recipient (or the insured's estate, if the insured is deceased) by January 31 of the year following the calendar year in which benefits were paid. The filing deadline with the IRS also follows the standard information-return calendar — January 31 for paper and electronic filers under current rules, though extensions may apply in certain circumstances.
Note that state-sponsored long-term care programs and certain government programs may have different reporting rules, and not all care-related payments trigger a 1099-LTC; only payments under qualifying contracts or qualifying accelerated death benefit provisions do.
Key Fields
Box 1: Gross long-term care benefits paid
Reports the total amount paid during the calendar year under a qualified long-term care insurance contract. This is the gross figure before any exclusion analysis — the recipient uses Form 8853 to determine what portion, if any, is taxable. Include reimbursement-type payments and per-diem payments alike in this box.
Box 2: Accelerated death benefits paid
Shows accelerated death benefits paid under a life insurance policy or by a viatical settlement provider. Amounts paid to a terminally ill individual are fully excludable from income under IRC Section 101(g); amounts paid to a chronically ill individual are subject to the same per-diem exclusion limits as long-term care benefits and require Form 8853 to calculate the excludable portion.
Box 3: Per diem / reimbursed amount (checkbox)
This checkbox — not a dollar amount — indicates the method of payment: 'Per Diem (or other periodic basis)' or 'Reimbursement (or actual expense).' The distinction is critical because per-diem payments are subject to the annual IRS per-diem limit for the exclusion, whereas reimbursement-based payments are excludable in full up to actual qualified long-term care costs. Getting this checkbox wrong can cause the recipient to miscalculate taxable income on Form 8853.
Box 4: Insured's status (checkboxes)
Indicates whether the insured was chronically ill or terminally ill at the time benefits were paid. 'Terminally ill' means a physician has certified a life expectancy of 24 months or less. 'Chronically ill' means the individual is unable to perform at least two activities of daily living for at least 90 days or requires substantial supervision due to severe cognitive impairment. This status directly determines whether the full exclusion or the per-diem-capped exclusion applies.
Payer / insurer information (top of form)
The payer's name, address, and TIN must be accurate and match the payer's information returns filed with the IRS. Errors here can cause IRS matching failures and unnecessary CP2100 notices to the payer.
Policyholder information vs. insured information
Form 1099-LTC requires both the policyholder's and the insured's name, address, and TIN. These can be different people — for example, an adult child may be the policyholder on a parent's long-term care policy. The form is issued with the insured's TIN, because the insured is the one who may have taxable income, but many payers mistakenly use only the policyholder's information.
Account number
Optional but recommended by the IRS if the payer has multiple accounts for the same insured. Using a consistent account number facilitates matching if a corrected form is needed later and reduces confusion when a single individual holds multiple policies.
Filing Deadlines
January 31
Penalties range from $60 to $310 per form for late filing.
Step-by-Step Instructions
- 1
Gather payment records for all long-term care and accelerated death benefit claims paid during the calendar year, organized by insured individual and policy type. Confirm that each payment was made under a qualified long-term care insurance contract or a qualifying accelerated death benefit provision — non-qualifying payments should not appear on Form 1099-LTC.
- 2
Verify the TIN, full legal name, and current mailing address for each insured individual using your records or a W-9 on file. Because the form is tied to the insured's SSN (or EIN for entity-owned policies), TIN accuracy is essential to avoid IRS B-notices and backup withholding obligations.
- 3
Determine the payment method for each policy: per diem or reimbursement-based. Pull the policy contract or claims documentation to confirm — do not rely solely on how the check was issued, as some contracts have hybrid structures. Mark Box 3 accordingly.
- 4
Confirm the insured's status — terminally ill or chronically ill — for the relevant period in which benefits were paid. This determination should be supported by a physician's certification in the claim file. Mark Box 4 with the correct status; if status changed during the year, consult the IRS instructions for the applicable year to determine how to report.
- 5
Complete Box 1 with gross long-term care benefits or Box 2 with accelerated death benefits, as applicable. If a policy paid both types of benefits (uncommon but possible in hybrid products), consult the IRS instructions for that filing year regarding whether separate forms are required.
- 6
Prepare a separate Form 1099-LTC for each insured. If you are using tax preparation or payroll software, input all data fields and run a validation pass to catch missing TINs, blank required checkboxes, and mismatched payer information before generating the print or e-file output.
- 7
Furnish Copy B to the recipient (insured or policyholder, per your contract terms) no later than January 31. Transmit Copy A to the IRS by January 31 as well — either by paper (with Form 1096) or electronically through the IRS FIRE system. If filing 10 or more information returns in aggregate (under the threshold effective for the applicable tax year), electronic filing is mandatory.
- 8
Retain a copy of each filed Form 1099-LTC, supporting claim documentation, and the physician's certification in the insured's file for at least four years in case of IRS inquiry or dispute.
- 9
If an error is discovered after filing, issue a corrected Form 1099-LTC promptly, checking the 'CORRECTED' box. Notify the recipient and file the corrected form with the IRS. Do not issue a second original — always use the correction process to avoid double-counting at the IRS matching level.
Common Mistakes to Avoid
Misidentifying the insured's TIN by using the policyholder's SSN instead of the insured's SSN when they are different individuals.
Always collect a W-9 or equivalent documentation from the insured — not just the policyholder — before issuing the form. Audit your records annually for policies where the policyholder and insured differ.
Leaving Box 3 (per diem vs. reimbursement) blank or checking the wrong option.
Review the policy contract type, not just the payment record, to determine the correct payment method. This checkbox directly affects the exclusion calculation on the recipient's Form 8853 and an incorrect entry can result in the recipient over- or under-reporting income.
Omitting Form 1099-LTC entirely because the benefits are expected to be excludable from income.
The reporting requirement exists regardless of taxability. The IRS requires payers to file even when all amounts will be excluded by the recipient — it is the recipient's burden, via Form 8853, to establish the exclusion. Failure to file triggers information-return penalties.
Issuing a single Form 1099-LTC for both spouses covered under a joint or spousal policy.
A separate form must be filed for each insured individual. Split the payments by insured and issue two forms, each with the respective insured's TIN and payment amounts.
Confusing accelerated death benefits paid to terminally ill individuals (fully excludable, Box 2) with those paid to chronically ill individuals (per-diem-limited, also Box 2), leading to incorrect Box 4 coding.
Review the physician's certification in the claim file before coding Box 4. Terminal illness requires a prognosis of 24 months or less; chronic illness is a separate, function-based determination. The distinction materially affects the recipient's tax calculation.
Missing the January 31 deadline for both recipient furnishing and IRS filing, then failing to request an extension before the deadline.
Calendar the January 31 deadline well in advance. If an extension is needed for IRS filing, file Form 8809 before the original due date. Note that extensions for recipient furnishing are granted only in limited hardship circumstances and require a separate request.
Frequently Asked Questions
Not necessarily. Benefits paid under a qualified long-term care insurance contract are excludable from income up to an IRS-published per-diem limit (for per-diem policies) or in full up to actual qualified expenses (for reimbursement policies), provided the insured is chronically or terminally ill. The recipient uses Form 8853 to calculate the excludable portion and reports any taxable excess on Form 1040. Receiving a Form 1099-LTC does not automatically mean you owe tax.
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